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4Q20 Financial Results

Business

4Q20 Financial Results

Vale announced on Thursday, February 25th, its financial result for the 4Q20. The adoption of measures to fight the COVID-19 pandemic and the continuity of the integral reparation of Brumadinho were Vale’s priorities in 2020.

It was a year in which we took important steps to become a more reliable operator. By establishing the Global Agreement of Brumadinho, improving our safety standards and partially resuming all our iron ore operations halted in 2019, we advanced into further derisking our business. With this, we are preparing Vale for more solid results in 2021,

commented Eduardo Bartolomeo, Chief Executive Officer.

Brumadinho reparation

Advancing with Brumadinho reparation is our priority. As of February 2021, over 9,100 people were individually indemnified, and more than R$ 13 billion were destined to indemnifications, to infrastructure works and to environmental and socio-economic reparation initiatives. In 4Q20, Vale concluded the works on two pipelines for water withdraw on the Pará River, in Pará de Minas, as part of the construction of new water supply systems to serve the population of Pará de Minas and metropolitan area of Belo Horizonte. A third one, on the Paraopeba River, will be delivered in 1H21.

Dams safety

Vale is well positioned to be adherent to the new Global Industry Standard on Tailings Management - GISTM by the end of 2021. The company is working to have all 32 structures currently at Emergency Level in safe conditions by 2025. We also promoted PAEBM (emergency action plans for mining dams, in Portuguese) drills for all Emergency Levels 2 and 3 dams.

Cultural transformation and Vale Production System - VPS

Our cultural transformation aims to bring safety, people and reparation to the core of our decisions, with five key behaviors present across the company: Obsession with safety and risk management; Open and transparent dialogue; Empowerment with accountability; Ownership for the whole; Active listening and engaging with Society. As a cornerstone of the cultural transformation, we started the implementation in large scale of our Vale Production System - VPS.

Early extension of railway concessions

In December 2020, Vale agreed terms with the Brazilian Federal Government to extend its concessions to operate the Estrada de Ferro Carajás and Estrada de Ferro Vitória Minas railways by 30 years, from 2027 to 2057. To secure the extensions, Vale has agreed to commitments with a Net Present Value of US$ 2.312 billion, with the most significant being the construction of the 383 km railway FICO – Ferrovia de Integração Centro Oeste – on behalf of the Federal Government.

Imagem Relatório Financeiro

Results

Proforma adjusted EBITDA reached US$ 9.103 billion in 4Q20, US$ 2.879 billion higher than in 3Q20, totaling US$ 15.327 billion in the second half of 2020 and US$ 21.954 billion for the full 2020 year.

The quarterly result was mainly driven by the strong performance of Ferrous Minerals business, as a result of 17% higher realized prices (US$ 1.598 billion) and 26% higher sales volumes (US$ 1.364 billion); higher nickel (US$ 113 million) and copper (US$ 57 million) realized prices, following the 12% and 10% higher than 3Q20 average LME reference price, respectively; and higher nickel by-product credits, mainly due to higher volumes of copper, rhodium and palladium (US$ 97 million).

Vale posted net income of US$ 739 million in 4Q20, US$ 2.169 billion lower than 3Q20, mainly due to higher Brumadinho expenses, following the Global Settlement for reparation of Brumadinho.

To check financial and production reports, click below. On Friday, February 26th, will be held webcasts for investors at 10am (Portuguese) and 12pm (English) – Brasilia time - to comment the results.